Your Directors are pleased to present their 31st Annual Report on the affairs of theCompany together with the Audited Statement of Accounts for the year ended 31st March2017.
| ||2016-17 ||2015-16 |
| ||(Rs in lakhs) ||(Rs in lakhs) |
|FINANCIAL RESULTS || || |
|Profit before Finance Cost || || |
|Depreciation Tax ||(134.65) ||572.11 |
|Less: Finance Costs ||669.26 ||698.62 |
|Profit/(Loss) before Depreciation ||(803.91) ||(126.51) |
|Less: Depreciation ||419.73 ||445.05 |
| ||(1223.64) ||(571.56) |
|Less: Provision for Income Tax ||_ ||_ |
|Less: Prior Years' Tax Expense || || |
|(Net) ||_ ||0.59 |
|Add: Deferred Tax Assets ||18.99 ||34.01 |
|Profit/(Loss) for the year ||(1204.65) ||(538.14) |
|Balance brought forward from previous year ||634.40 ||1172.54 |
|Balance Carried to || || |
|Balance Sheet ||(570.25) ||634.40 |
During the year revenue from the operations of the Company is Rs.187.89 Crores ascompared to Rs.233.92 Crores in the previous year. The operating loss of the Company isRs.1.35 Crores as against operating profit of Rs.5.72 Crores in the previous year. Theloss after finance cost and depreciation is Rs.12.24 Crores as against the loss of Rs.5.72Crores in the previous year.
The fall in revenue from operations is mainly due to lock out / strike in the millsfrom 2nd May 2016 to 9th September 2016.
The Board has decided not to recommend any dividend for the financial year 2016-17.
The paid up Equity Share Capital as on 31st March 2017 was Rs.87498650.
During the year under review the Company has issued 5000000 6% Non-CumulativeNon-Convertible Redeemable Preference Shares of Rs.10 each to M/s. PBM Polytex Limited onPrivate Placement basis.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY
No material changes and commitments affecting the Financial Position of the Companywhich have occurred between the end of the Financial Year of the Company to which theFinancial Statement relate and the date of this report.
CONSERVATION OF ENERGY TECHNOLOGY A B S O R P T I O N F O R E I G N E XC H A N G EEARNINGS AND OUTGO
In accordance with the provisions of Section 134 of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 required information relating to the Conservation ofEnergy Technology Absorption and Foreign Exchange Earnings and Outgo is given in"Annexure A" to the Directors' Report.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Shri Gopal Patodia (DIN: 00014247) retires by rotation at theensuing Annual General Meeting and being eligible offers himself for re-appointment.Accordingly his re-appointment forms part of the Notice of the ensuing Annual GeneralMeeting. The Company has received declarations from all the Independent Directors of theCompany confirming that they meet the criteria of Independence as prescribed under thesub-section (7) of Section 149 of the Companies Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134 (3) (c) of the Companies Act 2013 your Board of Directorshereby state: (a) that in the preparation of the Annual Accounts for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any; (b) that such accounting policies asmentioned in the Notes to the Financial Statements have been selected and applied themconsistently and judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March 2017 and ofthe Profit & Loss of the Company for the year ended on that date;
(c) that the Directors have taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; (d) that the annual accounts have been prepared on a going concernbasis; (e) that Directors have laid down Internal Financial Controls to be followed by theCompany and such Internal Financial Controls are adequate and operating effectively; (f)that systems to ensure compliance with the provisions of all applicable laws were in placeand were adequate and operating effectively.
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anAnnual Performance evaluation of its own performance the Directors individually as wellas the evaluation of the working of its various Committees.
Pursuant to Regulation 25(4) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate exercise was carried out by IndependentDirectors at their separate meeting to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders etc.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Directors being evaluated.
During the year five Board Meetings were convened and held the details of which aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's policy on Directors' Appointment and Remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters provided under sub-section(3) of Section 178 is annexed hereto and forms a part ofthis report.
AUDITORS Statutory Auditors
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 made thereunder the term of office of M/s. Lodha &Co. Chartered Accountants as the Statutory Auditors of the Company will conclude fromthe close of ensuing Annual General Meeting of the Company.
The Board of Directors places on record its appreciation to the services rendered byM/s. Lodha & Co. as the Statutory Auditors of the Company.
Subject to the approval of the Shareholders the Board of Directors of the Company hasrecommended the appointment of M/s. SVP & Associates Chartered Accountants (Firm'sReg. No. 003838N) as the Statutory Auditors of the Company pursuant to Section 139 of theCompanies Act 2013.
Accordingly the Board recommends the resolution in relation to appointment ofStatutory Auditors for the approval by the shareholders of the Company.
As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Company has been carrying out audit of Cost Recordsrelating to Textile.
The Board of Directors on the recommendation of the Audit Committee has appointedM/s. A. G. Anikhindi
& Co. Cost Accountants as Cost Auditor to audit the Cost Accounts of the Companyfor the financial year 2017-18.
As required under the Companies Act 2013 a resolution seeking shareholders' approvalfor the remuneration payable to the Cost Auditor forms part of the Notice convening theAnnual General Meeting for their ratification.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s. S. K. Jain & Co. Practising Company Secretaries to conductSecretarial Audit of the Company for the financial year 2017-18.
AUDITORS AND REPORTS
The matters related to Auditors and their Reports are as under:
1. Report of Statutory Auditor:
The Report given by the Statutory Auditors for the Financial Statements for the yearended 31st March 2017 read with explanatory notes thereon do not call for any explanationor comments from the Board under Section 134 (3) of the Companies Act 2013.
2. Report of Secretarial Auditor:
M/s. S. K. Jain & Co. Practicing Company Secretaries was appointed to conductSecretarial Audit of the Company for the financial year 2016-17 as required under Section204 of the Companies Act 2013 and the Rules thereunder. The Secretarial Audit Report forthe financial year 2016-17 forms part of the Annual Report as "Annexure B" tothe Boards Report. The said report does not contain any observation or qualificationrequiring explanation or comments from the Board under Section 134 (3) of the CompaniesAct 2013.
The Company has complied with all the mandatory requirements of Corporate Governanceas stipulated in Regulation 27 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A seperate report on Corporate Governance and aCertificate from M/s. Lodha & Co. Statutory Auditors regarding compliance with theconditions of Corporate Governance is given in a separate section and forms part of theAnnual Report.
The Board has well-qualified Audit Committee with majority of Independent Directorsincluding Chairman. They possess sound knowledge on Accounts Audit Finance TaxationInternal Controls etc. The details of the Composition of the Audit Committee are given inthe Corporate Governance Report.
The Company Secretary of the Company acts as Secretary of the Committee.
During the year there are no instances where the Board had not accepted therecommendations of the Audit Committee.
NOMINATION & REMUNERATION COMMITTEE & POLICY
The Company has duly constituted Nomination & Remuneration Committee to align withthe requirements prescribed under the provisions of the Companies Act 2013 and Regulation19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Thedetails of the Composition of the Nomination & Remuneration Committee are given in theCorporate Governance Report.
The Board has framed a policy for selection and appointment of Directors SeniorManagement and their Remuneration. The policy provides for determining qualificationspositive attributes and independence of a Director.
The Company has laid down the procedures to inform the Board about the risk assessmentand minimization procedures and the Board has formulated Risk Management policy to ensurethat the Board its Audit Committee and its Executive Management should collectivelyidentify the risks impacting the Company's business and document their process of riskidentification and risk minimization as a part of a Risk Management policy/strategy.
The common risks inter alia are: Regulations Credit Risk Foreign Exchange andInterest Risk Competition Business Risk Technology Obsolescence Investments Retentionof Talent and Expansion of Facilities etc. Business Risk inter-alia further includesfinancial risk political risk legal risk etc. The Board reviews the risk trendexposure and potential impact analysis and prepares risk mitigation plans if necessary.
Further in accordance with the Regulation 21 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a Risk Management Committee has also beenformed which also oversees the Risk Management of the Company.
The details of the Composition of the Risk Mnagement Committee are given in theCorporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY(CSR)
The Company is not required to contribute towards CSR under Section 135 of theCompanies Act 2013 read with Rules thereunder.
The Board of Directors of your Company however has constituted a CSR Committee. Thedetails of the Composition of the Corporate Social Responsibility Committee are given inthe Corporate Governance Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.
Based on the report of Internal Audit function corrective action are undertaken in therespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board.
During the year under review no material or serious observation has been received fromthe Internal Auditors of the Company for inefficiency or inadequacy of such controls.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
In line with the best Corporate Governance practices Company has put in place a systemthrough which the Directors and Employees may report concerns about unethical behaviouractual or suspected fraud or violation of the Company's Code of Conduct & Ethicswithout fear of reprisal. The Employees and Directors may report to the Compliance Officerand have direct access to the Chairman of the Audit Committee. The Whistle Blower Policyis hosted on the website of the Company.
D I S C LO S U R E U N D E R T H E S E X UA L HARASSMENT OF WOMAN AT WORKPLACE ( P R EV E N T I O N P R O H I B I T I O N A N D REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. All woman employees (permanent contractual temporary and trainee) are coveredunder this Policy. The following is a summary of Sexual Harassment complaints received anddisposed off during the year: a) No. of Complaints received: Nil b) No. of Complaintsdisposed off: Nil
DISCLOSURE UNDER SECTION 197 (12) OF THE COMPANIES ACT 2013
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below: a. Ratio of theremuneration of each Director to the median remuneration of the employees of the Companyfor the financial year:
|Name of Director ||Ratio to Median Remuneration |
|Shri K. K. Patodia ||28.44 |
|Shri Narayan Patodia ||13.98 |
|Shri Rajiv Patodia ||13.81 |
b. Percentage increase in remuneration of each Director Chief Executive Officer ChiefFinancial Officer Company Secretary in financial year:
|Name of Person ||Designation ||% increase in remune- ration in financial year |
|Shri K. K. Patodia ||Chairman and MD ||- |
|Shri Narayan Patodia ||Managing Director ||- |
|Shri Rajiv Patodia ||Executive Director and CFO ||- |
|Shri Rahul Rawat ||Company Secretary ||- |
c. Percentage increase in the median remuneration of employees in the financial year:
1.01% d. The number of permanent employees on the rolls of the Company:
1049 employees e. Average percentile increase already made in the salaries of employeesother than the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 1.90%. However during the course of the yearthe total increase is approximately (0.72)% after accounting for promotions and otherevent based compensation revisions.
Increase in the managerial remuneration for the year was NIL. f. Affirmation that theremuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
A statement comprising the names of top 10 employees in terms of remuneration drawn andevery person employed throughout the year who were in receipt of remuneration in terms ofRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed herewith as "Annexure C" and forms an integral part of thisReport.
The above Annexure is not being sent along with this Annual Report to the Members ofthe Company in line with the provision of Section 136 of the Companies Act 2013. Theaforesaid Annexure is available for inspection by Shareholders at the Registered Office ofthe Company 21 days before and up to the date of the ensuing Annual General Meetingduring the business hours (working days) of the Company.
None of the employees listed in the said Annexure is a relative of any Director of theCompany. None of the employees hold (by himself or along with his/her spouse and dependentchildren) more than two percent of the equity shares of the Company.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review the Company has not g i v e n a n y l o a n s a n d g u ar a n t e e s . D e t a i l s o f Investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the Financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant Related Party Transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large and hence enclosing of Form AOC-2 is not required.All Related Party Transactions are placed before the Audit Committee as well as the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall Related
Par ty Transactions is placed before the Audit Committee and the Board of Directors fortheir approval on a quarterly basis. The Company has developed a Related PartyTransactions Policy for the purpose of identification and monitoring of such transactions.
The policy on Related Party Transactions as approved by the Board is available on theCompany's website at www.eurotexgroup.com.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Regulation 34 (2) (e) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion & Analysis Report for theyear under review is given under a separate section and forms part of the Annual Report.
The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposit) Rules 2014 during the year under review. Hence the requirement for furnishingof details of deposits which are not in compliance with the Chapter V of the Act is notapplicable.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134 (3) (a) of the Companies Act 2013 Extractof the Annual Return for the financial year ended 31st March 2017 made under theprovisions of Section 92 (3) of the Companies Act 2013 in Form MGT - 9 is annexedherewith as "Annexure D".
Your Directors wish to place on record their appreciation and thankful acknowledgementfor valuable assistance the Company received from all Customers Agents SuppliersInvestors and Lending Bankers.
| ||On behalf of the Board |
| ||K. K. PATODIA |
|Place : Mumbai ||Chairman |
|Date : 20th May 2017 ||and Managing Director |